Associate Professor, Institute of Social Studies, P.O. Box 29776, 2502 LT The Hague,*

The Netherlands. Tel. +31-70-4260542, Fax: +31-70-4260799, E-mail: Kay@iss.NL,Homepage: http://www.iss.nl

LATIN AMERICA'S EXCLUSIONARY RURAL

DEVELOPMENT IN A NEO-LIBERAL WORLD

Cristóbal Kay*

Paper presented at the 1997 meeting of the Latin American Studies Association (LASA),

Continental Plaza Hotel, Guadalajara, Mexico, April 17-19, 1997.

An earlier version of this paper was published in S. Halebsky and R.L.**

Harris (eds.), Capital, Power, and Inequality in Latin America, Boulder(CO): Westview Press, 1995.

LATIN AMERICA'S EXCLUSIONARY RURAL DEVELOPMENT

IN A NEO-LIBERAL WORLD**

Cristóbal Kay

Latin America's rural economy and society has undergone profound changes in

the post-war period due to the increasing integration of its agriculture into

the global agro-industrial food regime and by state policies ranging from

agrarian reform to liberalization. Furthermore its importance has declined.

While in 1960 over half the Latin American population was rural, today it is

only one-quarter; agriculture's share in the value of total Latin American

exports declined from approximately half to one-fifth; and agriculture's

contribution to the Gross Domestic Product (GDP) fell from almost one-fifth

to under 10 per cent.

This paper argues that the neo-liberal policies followed by an

increasingly larger number of Latin American countries since the 1980s has

deepened the exclusionary character of agriculture's modernization. New

capitalist groups have emerged and prospered while traditional landlords have

further declined. The peasant economy, although still an important provider

of employment and staple foods, is a relatively declining sector and many

peasants have been marginalized as producers, being condemned to a bare

subsistence level and/or to seek wage employment. A more complex and

heterogeneous agrarian structure exists today in comparison to the old bimodal

latifundia-minifundia or hacienda system.

Globalization and Latin American Agriculture

Since the 1980s, the shift away from import-substituting-industrialization

towards a new outward-oriented development strategy, has further integrated

the Latin American agricultural sector into the world economy and has been

accelerated by the process of globalization. The debt crisis of the 1980s and

the adoption by most Latin American countries of 'structural adjustment

programmes' stimulated agricultural exports in the hope that these would

alleviate Latin America's foreign exchange problems. As a result of the export

drive, agricultural exports have been growing much faster than production for

the domestic market.

These shifting production patterns have modified the rural social

structure in Latin America. It has largely been the capitalist farmers who

3

have been able to take advantage of, and benefit from, the new opportunities:

the financial, organizational and technological requirements of the export

products being beyond the reach of the peasant economy. Nevertheless, through

agribusiness contract farming, some smallholders have been able to participate

in the production of agro-industrial products for export or for high-income

domestic urban consumers. This integration of some sections of the peasantry

as producers into the agro-food complex has accentuated the socio-economic

differentiation process. While some peasants have been able to prosper through

capital accumulation and expanded reproduction thereby evolving into

'capitalized family farmers' (Lehmann 1982) or 'capitalist peasant farmers'

(Llambí 1988), others have become 'proletarians in disguise' (i.e. formal

owners of a smallholding but in effect completely tied to, and dependent on,

agribusiness) earning an income similar to the average rural wage, or 'semi-

proletarians' whose principal source of income is no longer derived from the

household plot but the sale of their labour power for a wage. Furthermore, a

significant proportion of peasants have been 'openly' and fully

proletarianized, having been displaced from markets through the shift in

consumer tastes, cheap and subsidized food imports, competition (often unfair)

from agribusiness, and technological obsolescence, among other factors.

Latin America's Agricultural Performance

Agriculture continues to provide a major share to Latin American foreign

exchange earnings although its contribution declined substantially in the

1970s and 1980s. Agricultural exports which accounted for 44 per cent of the

total value of exports in 1970 declined to 24 per cent in 1990 (ECLAC 1993:

81). In only exceptional cases, such as in Chile, has the share of agriculture

in total export earnings risen. Since the 1960s subsistence crops, which are

mainly produced by the peasant sector, grew at a much lower rate than export

crops, produced largely by the medium and large commercial farm sector. This

reverses the trend of the 1950s and early 1960s in which agricultural

production for the domestic market grew faster than production for export.

Non-traditional exports such as soybeans and fresh and processed fruits were

particularly dynamic, while most of the traditional export products like coffee,

sugar, bananas and cotton recorded below average rates of export growth.

Subsistence crops performed poorly as a consequence of discriminatory government

policies, unfair international competition, and changes in urban consumption

patterns which have been shifting away from traditional staple commodities (such

as potatoes, cassava, beans, maize and sweet potatoes) to more processed and

varied commodities (such as vegetable oils, bread, noodles, rice, poultry, pork,

dairy products, and fruit and vegetables), often with a higher import content.

4

Capitalization and Modernization of Agriculture

The modernization and liberalization of agriculture based on the growth of an

export sector followed upon earlier modernization strategies. During the 1960s

and 1970s a shift towards the intensification of Latin American agriculture

took place. Many Latin American governments encouraged the modernization of

the hacienda system through such measures as subsidized credits for the

purchase of agricultural machinery and equipment, better quality livestock,

fertilizers, and improved seed varieties as well as the delivery of technical

assistance programmes. Consequently large commercial farmers began to shift

to higher value added crops which were in increasing demand by urban consumers

and to capitalize their enterprises through land improvements (for example

increase the area under irrigation), upgrading infrastructure, mechanization,

etc. This process of modernization can be characterized as the 'landlord road'

to agrarian capitalism as landlords themselves transform their large landed

estates into commercial profit-oriented capitalized farms.

Also green revolution type technologies, involving improved seeds, were

increasingly adopted. In 1970 about one-tenth of Latin America's wheat area

was sown with high-yield varieties but today this has risen to nine-tenth. The

spread of the green revolution, a technological package much favoured by the

TNCs, also contributed to the increased use of fertilizers and pesticides.

This intensification of agriculture meant that growth in output was

increasingly achieved by an increase in the productivity of the various

factors of production. However up to the 1980s the expansion of agriculture's

land area still accounted for sixty per cent of output growth; thereafter the

intensive margin predominated as a source of agricultural growth (Ortega 1992:

123). However, this process of capitalization has proceeded unevenly in

different Latin American countries. In Brazil, agriculture continues to expand

to an important, though lesser extent, via the extensive margin due to the

colonization of the Amazonian frontier. Furthermore, within agriculture

capitalization has been largely confined to the commercial farm sector,

leaving peasant agriculture relatively unaffected.

Scope and Unravelling of Land Reforms

While the hacienda was modernized and capitalized, more structural changes

took place in some Latin American countries as a result of agrarian reforms.

The impulse behind agrarian reform was as much political as economic. Aside

from the declining performance of agriculture, social and political conflicts

arising from landlord-peasant relations were viewed by some governments as a

source of instability. The US and Latin American governments, haunted by the

5

spectre of socialism following the Cuban revolution of 1959, launched the

Alliance for Progress in the early 1960s. Agrarian reforms were regarded as

a way of defusing peasant uprisings and preventing more fundamental political

and economic change.

Agrarian reform policies aimed to replace what came to be considered as

the inefficient hacienda system. Prior to land reform, the agrarian structure

in the 1950s and early 1960s was one in which large estates or latifundios,

constituted roughly five per cent of farm units but possessed about four-fifth

of the land, while small farms or minifundios made up roughly four-fifths of

the farm units but controlled only five per cent of the land. Latifundios

under-utilized land by farming it in an extensive manner and left a

significant proportion uncultivated. Minifundios, by contrast, used too much

labour on too little land. Thus it is not surprising to find that while labour

productivity was much higher on latifundios than on minifundios, the reverse

was the case regarding land productivity. The dominant social relations of

production were those of unpaid household labour working on the minifundia

('external peasant family farms') and on various kinds of small-scale

tenancies ('internal peasant family farms'). Peasant holdings employed about

half the agricultural labour force, of which four-fifths were unpaid family

workers, while large estates employed less than one-fifth of the agricultural

labour force. Furthermore, an estimated one quarter of agricultural workers

were tenants or squatters and a further third were landless or proletarian

(Barraclough 1973).

It was hoped that a new reformed sector would increase agricultural

productivity and production and by improving access to land, rural incomes,

and employment prospects would contribute to political stability. In addition,

it was expected urban consumers would benefit from lower food prices and

industrial producers from a wider home market for industrial goods. At their

broadest, agrarian reforms were regarded as a way of overcoming the domestic

market and foreign exchange constraints facing Latin America's struggling

industrialization process after the so-called 'easy-phase' of industrial

import substitution (ISI) was exhausted. Today land reform proponents tend to

include gender and environmental concerns and particularly emphasize social

participation and political democratization.

The most far reaching agrarian reforms were the outcome of social

revolutions in Mexico (1917), Bolivia (1952), Cuba (1959), and Nicaragua

(1979). However, the agrarian reforms in Chile during the elected governments

of Frei (1964-70) and Allende (1970-73) and in Peru during the military regime

of Velasco Alvarado (1969-75) were also quite extensive in terms of land

expropriated and numbers of peasant beneficiaries. Of lesser consequence were

the agrarian reforms of Venezuela, Colombia, Costa Rica, Honduras, Dominican

Republic, Ecuador, Panama and El Salvador. The major exceptions to land reform

6

are Argentina and Brazil where to date no significant agrarian reform has

taken place. In Brazil, with the return to civilian government in the mid-

1980s, hopes that an agrarian reform would be carried out were very high but

were soon crushed by strong opposition from landlords. However, the issue is

unlikely to disappear given the demand from impoverished peasants and landless

rural workers for land redistribution. In Paraguay and Uruguay colonization

programmes but no significant agrarian reform have taken place.

The legacy of agrarian reforms has diverged substantially from their

initial purposes and organizational structures. Many resulted in the

modernization of the hacienda system, and its transformation into a capitalist

farm, rather than its elimination 'from below' through the redistribution of

hacienda lands to peasants. Thus many land reforms can be considered as a

continuation and acceleration of an already well established landlord path to

agrarian capitalism.

Agrarian reforms failed to fulfil their expectations for a variety of

reasons. In some cases, the political will or power to enforce them was

lacking. Although governments regarded land reform as a panacea, they failed

to ensure the financial, technical, and institutional support necessary to

enhance the performance of agrarian reform. Mistakes in design and

implementation of agrarian reforms also contributed to their unravelling. In

some cases, an inadequate organizational model for the reform sector succeeded

in alienating peasants by limiting their participation in the decision-making

process or by excluding them from the benefits of reform altogether.

The more radical agrarian reforms encountered opposition from landlords

and other groups which modified or subverted their original intention. In some

cases, early gains of the agrarian reform were reversed following a counter-

revolution or military coup d'état. For example, in Guatemala the CIA

supported overthrow of Arbenz in 1954 reversed the agrarian reform which

resulted in the expropriation of about one-fifth of the country's arable land

and benefitted almost a quarter of the peasantry (Brocket 1988: 100). In

Chile, most landlords stayed in business since they either retained some land

(the reserve) or managed to reclaim part of their former property with the

1973-80 counter-reform. But the latifundia have not been restored since the

average size of the large estates is far smaller than before and, more

importantly, the relations of production have been completely transformed. On

account of the much reduced size of the reformed sector, the relatively

generous size of parcelas (on average nine times larger than the average

minifundia), and political discrimination against peasant activists (among

other reasons), fewer than half of the beneficiaries obtained a parcela which

was sold to them by the state for about half its market value (Kay and Silva

1993).

7

The 'unravelling' of Peru's agrarian reform intensified in the late 1980s

and early 1990s. In Peru hardly any expropriated land was returned to former

owners but has been redistributed to peasants. The coastal production

cooperatives were subdivided into parcelas. In the highlands part of the

cooperative's land was transferred to adjacent peasant communities and part

was distributed among individual cooperative members.

In Nicaragua peasant pressure and the war waged by the 'contras' led the

Sandinista government to modify its emphasis on state farms. Since the mid-

1980s there has been more emphasis on a peasant-oriented organization of the

reform sector. Thus more individual land titles have been awarded to

beneficiaries, reducing the relative importance of state farms and enhancing

the role of individual farming. This process was much intensified with the

fall of the Sandinista government in 1990 and some expropriated landowners

have been able to reclaim their farms (Enríquez 1997).

Last but not least, although over the years more and more of Mexico's

collective ejidos have been farmed individually, the 1991 reform of Article

27 of Mexico's Constitution will certainly facilitate and allow legal

privatization and thus open the gates for private investors to gain access to

ejido land with consequences which may be far from favourable to peasants.

The Legacy of Agrarian Reforms

The shift away from collectivist organizations to peasant farms enhanced the

prospects of a peasant road to agrarian capitalism. Although the break up of

the reformed sector enlarged the peasant sector initially, as shown above,

this situation has not been sustained. Neo-liberal policies, implemented with

increased vigour and frequency in Latin America since the 1980s, have resulted

in a withdrawal of support from the peasant sector. The liberalization of

land, labour and financial markets, increased exposure to international

competition, and the export drive have benefitted those with access to

capital, technical and informational resources, and markets. Those with little

or no access to these resources are being integrated in an increasingly

subordinate way or further marginalized. For example, in Chile about half of

the parceleros (owners of land parcels) have had to sell their land because

they were unable to repay the debt incurred when purchasing the land or

because they lacked capital and market experience to continue their farm

operations: a process referred to by some as 'impoverishing peasantization'.

Thus, in the final unravelling of Chile's agrarian reform only about 5 per

cent of the country's peasantry were able to acquire and retain a family farm.

Only where peasant farmers have been able to link themselves to new

technologies and markets, often through contracts with agribusinesses, is a

8

successful peasant sector emerging. Their chances of success are enhanced if

they organize themselves into producer associations so as to strengthen their

bargaining power with respect to both the state and agribusiness.

The break-up of the reformed sector has, thus, led to a more complex

agrarian structure. Although one cannot say that the classical landlord road

to agrarian capitalism has triumphed as a result of counter reforms, those

former landlords who retained a reserve have been able to capitalize and

prosper under neo-liberalism. In addition, the enhancement of the land market

has enabled new types of entrepreneurs (such as agribusinesses, agronomists,

farm managers, and traders) to acquire land and invest in agriculture to a

greater extent than in the past. Some capitalist farmers have acquired more

land over time but talk of neo-latifundism is premature and inappropriate.

Even where large farms have arisen (as in livestock and forestry plantations),

their social and technical relations of production differ from those of the

old type of latifundia.

The legacy of the agrarian reform is therefore complex and its future

uncertain. Certainly, the more radical agrarian reforms put an end to the

dominance of the landed oligarchy in Latin America. In general, they

contributed to capitalist development through institutional changes. By making

land and labour markets more competitive and flexible, they enhanced

agriculture's responsiveness to macroeconomic policy and market forces

(Thiesenhusen 1995).

New Relations of Production

The quickening pace of the capitalist transformation of the countryside,

together with the changes in the land tenure structure following the agrarian

reforms and counter-reforms have restructured both technical and social

relations of production. In addition the spread and dominance of agro-

industries and the growth of export agriculture have been an important

influence in some Latin American countries in reshaping rural labour markets

and production relations.

The technological transformation of agriculture discussed earlier has

largely been confined to 'entrepreneurial agriculture' (agricultura

empresarial). Macroeconomic policy, favouring the development and diffusion

of capital-intensive technologies and the bias of extension services in favour

of commercial farmers, has widened the technological gap between

entrepreneurial or capitalist agriculture and the peasant economy, reinforcing

a bimodal agrarian structure. It is difficult, if not impossible, for peasant

farmers to adopt new technology. Not only is it too risky and expensive, but

it is also inappropriate for small-scale agriculture and the inferior soils

9

of peasant farming. In addition, the harmful environmental consequences of

fossil fuel based technology is increasingly being called into question. The

capital-intensive (and often import-intensive) nature of this technology is

also inappropriate for Latin American economies as it requires too many scarce

capital resources (such as foreign exchange) and too few workers of the

abundant labour supply.

Changes in the Rural Labour Structure

The modernization of the latifundia has been accompanied by a structural shift

in the composition of the agricultural labour force. Compared to the

traditional personalistic and clientelistic relations which existed between

landlords and peasants, the relations between capitalist farmers and peasants

are increasingly mediated by impersonal market forces and characterized by new

forms of exploitation and subordination.

Four major changes in the composition of the labour force can be

highlighted: (a) the replacement of tenant labour by wage labour; (b) within

wage labour, the growth of temporary and seasonal labour; (c) the increasing

feminization of the agricultural labour force; and (d) the 'urbanization' of

rural workers.

a) The decline of tenant labour

Tenant labour used to supply most of the latifundia's permanent and temporary

labour needs. During the 1950s and 1960s, following the introduction of social

legislation (such as social security and a minimum wage) and increased peasant

agitation, tenant labour became more expensive than wage labour for landlords.

The rent income received from tenants (sharecroppers, labour-service tenants,

or others) was lower than the profits landlords could earn by working the land

directly with wage labour. Mechanization, which was attractive because of the

often overvalued local currencies and the availability of government

subsidized credits, turned direct cultivation by landlords into a more

profitable activity than tenancy. Thus the higher opportunity costs of

tenancies and tenant labourers resulted in their being replaced by wage

labourers, leading to an 'internal proletarianization' process. Already in

1973, the proportion of wage labour within the economically active

agricultural population varied between 30 and 40 per cent in most Latin

American countries and in a few cases it was over 50 per cent (Ibáñez 1990:

54-56), thereby indicating the high degree of proletarianization of the

peasantry since many were landless or had insufficient access to land to make

a living.

10

Landlords also reduced the number of tenants and permanent labourers they

employed for political reasons. In the changing political climate of the 1950s

and 1960s landlords responded to pressure from rural labour, especially

amongst tenants for land or reduced rent payments, by introducing labour-

displacing technology. In addition, landlords anticipated the implementation

of agrarian reform legislation by sub-dividing their estates among family

members or by selling part of the land. Agrarian reform legislation often

exempted farms below a certain size or efficient and modern enterprises even

though they exceeded the size limit. Where agrarian reform legislation allowed

landlords to retain a reserve, this generally included the best land, the farm

buildings as well as the livestock and agricultural machinery. As these were

now concentrated on a smaller farm, the capital-land ratio as well as the

capital-labour ratio improved. These reserve-type farms accordingly had much

lower labour requirements than the former estates and sometimes than other

farms of similar size.

b) The growth of temporary and seasonal wage labour

Within the shift to wage labour, there has been a marked increase in the

proportion of temporary, often seasonal, wage employment. In many countries

permanent wage labour has declined, even in absolute terms, while in almost

all countries temporary labour has greatly increased. In Brazil it is

estimated that in 1985 permanent wage labour had fallen to a third of rural

wage labourers; the remaining two thirds being employed on a temporary basis

(Grzybowsky 1990: 21). In Chile the shift from permanent to temporary labour

has also been dramatic. While in the early 1970s, approximately two thirds of

wage labour was permanent and a third temporary, by the late 1980s these

proportions had been reversed (Falabella 1991).

This growth of temporary labour is partly connected to the expansion of

agro-industries which export seasonal fruit and vegetables and is therefore

particularly evident in those Latin American countries which export these

products. This has led to the increasingly 'casualization' (precarización) or

precarious nature of rural wage labour. Temporary workers are generally paid

by piece rates, are not usually entitled to social security benefits and have

no employment protection. These changes in employment practices towards more

casual and flexible labour enable employers to increase their control over

labour by reducing workers' rights and bargaining power. Their introduction

has been facilitated by regressive changes in labour legislation, introduced

often by the military governments but continued by their neo-liberal civilian

successors. The expansion of temporary wage labour therefore represents a

deterioration in the conditions of employment.

11

This casualization of rural labour has contributed to the fracturing of

the peasant movement. Although seasonal labourers can be highly militant they

are notoriously difficult to organize due to their diverse composition and

shifting residence. Thus the shift from permanent to seasonal labour in the

countryside has generally weakened peasant organizations making it difficult

for them to negotiate improvements in their working conditions either directly

with their employers or indirectly by pressurizing the State.

c) The feminization of rural seasonal wage labour

Associated with the expansion of temporary and/or seasonal wage labour is the

marked increase in the participation of women in the labour force. In the

past, rural women worked as day labourers, milkmaids, cooks or domestic

servants on the landlord's estate. They also found seasonal wage employment

during the labour-intensive harvests on coffee, cotton and tobacco farms. With

the increasing commercialization of agriculture and the crisis of peasant

agriculture an increasing proportion of rural women have joined the labour

force. The majority have found employment in the urban service sector.

The rapid expansion of new export crops such as fruits, vegetables, and

flowers, however, has opened up employment opportunities for women. Agro-

industries largely employ female labour since women are held to be more

readily available, more willing to work on a seasonal basis, accept lower

wages, and are less organized and according to employers are better workers

for activities which require careful handling. Any permanent employment,

however, tends to be the preserve of men. Although they are employed in

generally low-skilled and low-paid jobs, aside from being temporary, for many

young women these jobs provide an opportunity to earn an independent income

and to escape (at least partially and temporarily) from the constraints of a

patriarchal peasant-family household. Even though the terms of their

incorporation are unfavourable, this does not necessarily imply that gender

relations have remained unchanged. Furthermore, with the rural women's rising

incorporation into the formal labour market they have begun to exercise

increasing influence in the affairs of peasant organizations and, in some

instances, have even established their own organization (Stephen 1993).

In Mexico, about 25 per cent of the economically active rural population

are employed in fruit and vegetable production and half of them are women

(Barrientos 1996: 274). In Colombia over 70 per cent of the labour employed

in the cultivation of flowers for exports and about 40 per cent of coffee

harvesters are women (ECLAC 1992: 103). In Chile about 70 per cent of

temporary workers in the fruiticulture export sector are women being employed

mainly in the fruit packing plants. Last, but not least, it is estimated that

in Ecuador in 1991 69 per cent of workers in non-traditional agro-export

production were women (Thrupp 1996: 69).

12

d) The 'urbanization' of rural labour

An additional dimension to the growth of temporary wage labour concerns the

geographical origins of the workers so employed. An increasing proportion of

temporary workers come from urban areas. In Brazil about half of temporary

workers employed in agricultural activities are of urban origin. They are

known as 'bóias frias' ('cold lunch', as they go to work with their lunch box

containing cold food) and 'volantes' ('fliers' or floating workers) who reside

on the periphery of cities or towns and fluctuate between rural and urban

employment. For example, about three-quarters of female volantes are employed

in the coffee growing industry and when there is no agricultural work they

tend to look for employment in the urban areas largely as domestics (ECLAC

1992: 98).

The growing presence of labour contractors (contratistas) who hire gangs

of labourers from small towns and cities for work in the fields, means that

the direct employer is not always even the farm owner or manager. This

indicates both the ruralization of urban areas, due to the high rates of

rural-urban migration, as well as the urbanization of rural areas with the

mushrooming of rural shanty-towns (poblados rurales), thereby blurring the

urban-rural divide. Furthermore, increasingly rural residents have to compete

with urban labourers for agricultural work, and vice-versa, leading to more

uniform labour markets and wage levels.

The expulsion of tenant labourers and the growth in temporary-type

employment has resulted in the creation of new rural villages and settlements

as well as in the expansion of old ones into small rural towns. Needless to

say these villages often lack the basic physical and social infrastructure and

provide few, if any, social services like schools and medical centres. In the

past shanty-towns were largely evident in the large cities of Latin America

but today they have spread to the smaller cities and even to rural towns. This

spread of shanty-towns is explained not only by the demise of the traditional

hacienda system and the changes in the agricultural labour market noted above

but also by the peasant economy's inability to absorb the growing population,

as will be seen later.

Agriculture, particularly entrepreneurial agriculture, has become more

locked into urban and industrial capital thereby blurring the rural-urban

divide. Many peasants have also become more urbanized or more closely linked

to the urban sector through seasonal migration, market integration, and the

informal establishment of 'confederations of households' between rural and

urban households which are linked through family, kinship or community ties.

13

The Campesinista and Descampesinista Debate

The internationalization of Latin America's agriculture, the demise of the

hacienda system and the increasing dominance of entrepreneurial agriculture,

are having a profound impact on the peasantry. How are these major

transformations affecting the development of the peasant economy, especially

in the wake of the increasingly widespread and entrenched neo-liberal policies

pursued by most governments throughout Latin America? This question will be

examined with reference to the Latin American debate on the peasantry and the

contemporary significance of the peasant economy.

The fate of the peasant economy and of Latin America's peasantry has been

the subject of much debate. In the late 1970s and 1980s the dominant view that

the landlord road to capitalism was steamrolling ahead was challenged by those

who emphasized the resilience, vitality and relative importance of the peasant

economy (Stavenhagen 1978, Warman 1979). A debate ensued between the

'campesinistas' ('peasantists') and the 'descampesinistas' or 'proletaristas'

('depeasantists' or 'proletarianists').

The campesinistas adhere to the endurance of peasant farming, which some

regard as superior to capitalist farming. They reject the view that the wage

relation is being generalized in the countryside and that the peasantry is

disappearing. They argue that the peasantry far from being eliminated is

persisting and even being reinforced. Thus they view the peasantry as mainly

petty commodity producers who are able to compete successfully with capitalist

farmers in the market rather than viewing them as sellers of labour power and

being subjected to processes of socio-economic differentiation.

In contrast, the descampesinistas or proletaristas argue that the peasant

form of production is economically unviable in the long run and that the

peasantry as petty commodity producers will eventually be eliminated to be

replaced by mainly capitalist farms and a few capitalized peasant farms.

Descampesinistas stress that capitalist development enhances the process of

differentiation among the peasantry transforming ultimately the majority into

proletarians.

The Latin American debate about the future of the peasant economy continues

today as it raises crucial issues about the nature of the agrarian question and

transition. While theoretical differences continue to feed the debate, the

changing reality and the availability of new statistical data also require an

ongoing process of reinterpretation. The peasant economy will undoubtedly survive

for some time to come in Latin America. The key question concerns the terms of

this survival: prosperity or destitution? Can the peasant economy provide

adequate productive employment and rising incomes? Will peasant producers be able

to increase productivity thereby stemming the erosion of their past role as a

14

major supplier of cheap food or will they become a mere supplier of cheap labour

to the capitalist entrepreneurial farm sector? Or, even worse, will the peasant

economy become a refuge for rural labourers who are unable to find alternative

employment opportunities in either the urban or rural sectors and in which they

do no more than barely survive?

The Contemporary Significance of the Peasant Economy

In the past, the importance of the peasant economy in Latin America was often

underestimated as national census data failed to record it, or to record it

accurately, especially the peasant tenant enterprises within the hacienda

system (the 'internal peasant economy'). This past (largely pre-1970s) neglect

of the peasant economy has led scholars to underestimate the process of

proletarianization, principally 'internal proletarianization', as well as

overestimate any subsequent peasantization of 'internal peasantries' resulting

from land reform or parcellization processes.

Turning to the present, the peasant household farm sector is still a

significant sector within Latin American rural economy and society. As we have

seen, the peasant economy has not faced a unilinear decline. In particular,

the parcellization of the reformed sector in Chile and Peru and, more

recently, in Nicaragua has significantly expanded the peasant sector. In Chile

parceleros control more land than the former external peasant enterprises who

did not benefit from land reform.

It is estimated that peasant agriculture in the 1980s in Latin America

comprised four-fifths of farm units, possessed a fifth of total agricultural

land, over a third of the cultivated land, and over two fifths of the

harvested area (López Cordovez 1982: 26). The peasant economy accounted for

almost two thirds of the total agricultural labour force, the remaining third

being employed by entrepreneurial or capitalist farms. Furthermore, peasant

agriculture supplied two fifths of production for the domestic market and a

third of the production for export. Their contribution to food products for

mass consumption is particularly important. At the beginning of the 1980s, the

peasant economy provided an estimated 77 per cent of the total production of

beans, 61 per cent of potatoes and 51 per cent of maize, as well as 41 per

cent of the share of such export products as coffee. In addition, the peasant

economy owned an estimated 24 per cent of the total number of cattle and 78

per cent of pigs (ibid.: 28). Other estimates, which use a wider definition

of the peasant economy, show that peasant farming made a particularly large

contribution to agricultural production in the following countries: Bolivia

80 per cent, Peru 55 per cent, Mexico 47 per cent, Colombia 44 per cent,

Brazil 40 per cent, and Chile 38 per cent (Jordán et al. 1989: 225).

15

The Process of Semi-Proletarianization

While the peasantry is far from disappearing, it is not thriving since their

relative importance as agricultural producers has declined. According to de

Janvry, Sadoulet and Young (1989) the Latin American peasantry are

experiencing a 'double (under-)developmental squeeze'. Firstly, they face a

land squeeze. By failing to acquire additional land to match their increased

numbers, the average size of peasant farms has decreased. This decline of the

peasant sector mainly concerns the small peasantry (minifundistas) which

accounts for about two thirds of peasant farm households. Their average farm

size decreased from 2.1 hectares in 1950 to 1.9 hectares in 1980. The

remainder of the peasant sector retained an average farm size of 17 hectares,

partly through the implementation of redistributive land reforms (de Janvry,

Marsh et al. 1989: 74). The precariousness of smallholders is underlined by

the fact that about 40 per cent of minifundistas lack property titles to the

land they farm (Jordán et al. 1989: 224). Secondly, peasants face an

employment squeeze as employment opportunities have not kept pace with the

growth of the peasant population and as they face increased competition from

urban-based workers for rural employment.

This double squeeze on the peasant economy has led many peasants to

migrate, feeding the continuing and high rate of rural out-migration. Peasants

have also responded by seeking alternative off-farm sources of income (such

as seasonal wage labour in agriculture) and/or non-farm sources of income

(such as small-scale informal enterprises and agro-industries).

In many Latin American countries over a quarter of the economically active

agricultural population currently reside in urban areas and the proportion of

the economically active rural population which is engaged in non-agricultural

activities is rising, reaching over forty per cent in Mexico and averaging

about twenty-five per cent in others (Ortega 1992: 129). Thus non-farm

employment, is expanding faster than farm employment in rural Latin America.

This trend means that an increasing proportion of total peasant household

income originates from wages, whereas income from their own-farm activities

often comes to less than half the total (de Janvry, Marsh et al. 1989: 141).

This process, which can be called semi-proletarianization, is the main

tendency unfolding among the Latin American peasantry. It is the small

peasantry who can be more accurately characterized as semi-proletarian as

between two-fifths and three-fifths of their household income is derived from

off-farm sources, principally from seasonal agricultural wage employment on

large commercial farms and estates (ibid.: 63). As the small peasantry is the

most numerous, it can be argued that this process of semi-proletarianization

is dominant. However, this process of semi-proletarianization is less marked

16

in those few Latin American countries where land reforms significantly

increased peasant access to land.

The Latin American peasant sector has increasingly become a refuge for

those rural labourers who are unable or unwilling to migrate to the urban

areas and who cannot find permanent employment in the capitalist farm sector.

Thus, while the peasant economy increased its share of employment by 41 per

cent between 1960 and 1980, employment in capitalist agriculture increased by

only 16 per cent (ibid.: 59). Furthermore, rapid technological improvements

in the capitalist farm sector and the insufficient land and capital resources

of the peasant farm sector and its technological stagnation, make a decline

in the peasants' role as agricultural commodity producers inevitable unless

corrective measures are taken by the State.

In short, Latin America's peasantry appears to be trapped in a permanent

process of semi-proletarianization and of structural poverty. Their access to

off-farm sources of income, generally seasonal wage labour, enables them to

cling to the land, thereby blocking their full proletarianization. This

process favours rural capitalists as it eliminates small peasants as

competitors in agricultural production and transforms them into cheap labour

which they can employ. Semi-proletarianization is the only option open to

those peasants who wish to retain access to land for reasons of security and

survival or because they cannot find alternative productive employment, either

in the rural or urban sector.

Structural Adjustment, Liberalization and Poverty

Agricultural modernization in Latin America, with its emphasis on capital

intensive farming and the squeeze on the peasant economy, means that rural

poverty remains a persistent and intractable problem. Furthermore, structural

adjustment programmes and stabilization policies of the 1980s are generally

considered to have had a detrimental impact on poverty. The contraction of

internal demand as a result of adjustment policies negatively affected those

farmers producing for the domestic market. Furthermore, trade liberalization

policies increased the competition from food imports. However, the elimination

of price controls on some basic food products partly compensated for the fall

in internal demand and the devaluation of local currencies created incentives

for agricultural exporters. In so far as structural adjustment policies

shifted relative prices in favour of tradables smallholders, whose source of

income is largely derived from non-tradables, suffer income losses compared

to capitalist farmers.

Adjustment policies exacerbated poverty as government expenditure on

social welfare, subsidies to basic foods and other essential commodities and

17

services was cut back. However, some governments reduced this negative impact

by targeting welfare payments more closely and by introducing poverty

alleviation programmes. But the main cause of rural poverty is structural,

being related to the unequal land distribution and the increasing proportion

of semi-proletarian and landless peasants. Tackling the root causes of poverty

will require major land redistribution and rural investments, raising

employment opportunities, improving agricultural productivity, particularly

of smallholders, thereby affording higher wages and peasant incomes. Only by

such a generalized assault on various fronts will it be possible to alleviate

rural poverty significantly. To achieve these goals rural workers and peasants

have to strengthen their organizations as well as their alliances with other

social groups in society so as to alter the balance of political power in

their favour. Government efforts (if any) are likely to be directed towards

tackling urban poverty, if only for short-term expedience. However, Latin

America's poverty is directly related to unresolved agrarian problems. How

long such a process of massive rural out-migration and government neglect of

the rural poor is sustainable remains an open question.

Multiple Paths of Transition

The characterization and identification of the future development path of

Latin American agriculture has been the subject of extensive theoretical

debate (Llambí 1990). In the early 1970s, I argued that the landlord road was

the predominant path to agrarian capitalism in Latin America (Kay 1974).

Goodman and Redclift (1982), as well as the campesinistas in the debate

mentioned earlier, criticized this view for underestimating the strength and

survival capacity of the peasantry. It was Lehmann (1982), however, whose work

on Ecuador first clearly identified a viable peasant path. But this path was

confined to a section of the peasantry which he conceptualized as 'capitalized

peasant farmers'. Many other researchers subsequently 'discovered' such a

'capitalized peasantry' in different areas of Latin America. While not denying

the possibility of a peasant path to agrarian capitalism I perceived it as

either subordinated to the dominant landlord path or as the outcome of a shift

in the class struggle in favour of the peasantry which could result in major

redistributive land reforms and/or beneficial macroeconomic policies (Kay

1988). In my view, the landlord road to agrarian capitalism was dominant in

the past, but today a multiplicity of paths can be observed in Latin America.

Compared to the bimodal structure of latifundia-minifundia, the Latin

American countryside is now characterized by greater complexity and diversity

through a process which could be labelled 'polarization with heterogeneity'.

First, a large proportion of former haciendas or latifundios have successfully

18

been, or are being, converted into medium-sized modern capitalist enterprises,

relying mainly on wage labour, using advanced technology, and integrated into

the domestic and international markets. Second, in those countries where the

reformed sector was subdivided into parcelas (plots of land), the peasant farm

sector has been significantly expanded. Third, a proportion of the parceleros

(those beneficiaries who acquired a parcela), albeit small, is joining the

capitalized-peasant farm sector by successfully taking advantage of new market

opportunities, improved links with agro-industries, pro-peasant government

policies, NGO support, and other possibilities which are arising. Fourth, a

significant proportion of parceleros have become indebted to such an extent

that they had to sell their parcelas. Capitalist farmers, agro-industries and

other capitalists have purchased these parcelas thereby expanding their

control over land. Fifth, the modernization of the latifundia has furthered

the peasantry's proletarianization, especially the 'internal peasantries' or

tenants. Last, but not least, the semi-proletarianization of many small

peasants continues to be a significant and persistent trend.

Undoubtedly, it is the modernized capitalist farmers, often linked to

agro-industrial and international capital, who set the pace and control the

direction of Latin America's agrarian developments - within the limitations

imposed by the relative decline of agriculture in the economy and its

subordination to the penetrating processes of trade liberalization and

globalization. Thus, while the 'capitalized peasant farmer' road will continue

to develop it is the 'capitalized capitalist farmer' road which predominates

in today's Latin American rural development.

State, Market and Civil Organizations

Neither the State-driven import-substitution-industrialization development

strategy from the 1950 to the 1970s nor the debt- and deregulated market-

driven process of the 1980s and 1990s have been able to resolve the peasant

question. Rural poverty and the exclusionary cum inegalitarian rural

development process are still with us. It was only during the brief land

reform interlude, which brought in its wake major peasant organizations and

mobilizations, that sections of the peasantry were beginning to emerge from

their marginalized situation only to have their hopes for a better future

cruelly smashed by the counter-reform period during the privatizing frenzy of

the neoliberal project. However, these past upheavals have created new

opportunities as well as constraints. In recent years calls for new thinking

for new policies for rural development practices are multiplying. Such voices

are seeking to find new ways of combining state action, with market forces and

civil organizations so as to make a fresh attempt to resolve the agrarian

19

question (de Janvry et al. 1995). To overcome the problems of poverty and

exclusionary and unsustainable growth requires strategic thinking and

practices. While acknowledging that these issues can only be resolved in the

long run they demand determined action today. The difficulty is to find the

local and global actors who will be able to combine the three parts of the

triangle composed of the state, market and civil organization so as to develop

a virtuous and enhancing interactions between them. One of the key actors in

this process has to be the peasantry and it is thus important to examine its

future development possibilities.

What Future for the Peasantry?

What then are the prospects for a peasant path to rural development? It is

well known that access to capital, technology, and domestic and foreign

markets, as well as knowledge and information systems, are becoming

increasingly important relative to access to land in determining the success

of an agricultural enterprise. Even though in recent decades some peasants

managed to gain access to land through agrarian reforms this by no means

secures their future development. Indeed, peasants in general are in an

increasingly disadvantageous position compared to capitalist farmers with

regards to the above mentioned factors and this does not auger well for their

future prospects. For example, the widening technological gap between the

capitalist and peasant farm sectors have prompted those involved with the

peasants' well-being to urge international agencies, governments and NGOs to

adapt existing modern technologies to the needs of the peasant sector as well

as to create more 'peasant-friendly', appropriate and sustainable

technologies. Such a policy, however, runs the danger of relying exclusively

on technological fix, while the sustainability of peasant agriculture depends

on wider social and political issues and particularly a favourable

macroeconomic context. In short, a viable peasant road to rural development

raises questions about development strategy and ultimately about the political

power of the peasantry and their allies.

For a peasant path to rural development to succeed requires a major shift

in development strategy, land redistribution, and a major transfer of

resources towards the peasant economy to ensure its capitalization on a scale

broad and deep enough for it to compete successfully both in domestic and

international markets. But the widespread adoption and intensification of

liberalization policies in Latin America and the decline of developmentalist

state policies do not encourage such a possibility.

In recent years, concerned scholars and institutions have become

increasingly vociferous in pointing out the adverse impact of Latin America's

20

'selective' agricultural modernization on the peasantry. As opposed to the

'concentrating and excluding' ('concentrador y excluyente') character of this

process of modernization, they call for a strategy which includes the

peasantry in the modernization process (Murmis 1994). Such an 'inclusive'

modernization is seen as part of the democratization of rural society and some

authors speak of 'democratic modernization' to highlight this link (Chiriboga

1992). Currently, suggestions are being made with a view to 'changing

production patterns with social equity' in Latin America and for the

'productive reconversion' of its agricultural producers so as to meet the

challenges of an increasingly internationalized and global world economy in

the new millennium (ECLAC 1990). To forward these aims, special government

policies in favour of the peasantry (a form of positive discrimination) are

proposed, to reverse the past bias in favour of landlords and rural

capitalists. The achievement of broadly-based growth requires activist State

policies so as to overcome market failures and biases against the poor while

at the same time harnessing the creative and dynamic forces of markets in

favour of the rural poor.

Non-Traditional Agricultural Exports (NTAXs)

Governments and NGOs concerned with promoting the development of peasant

farmers proposed a series of measures for facilitating their participation

into the lucrative agricultural export boom. It was almost exclusively

capitalist farmers who initially reaped the benefits of the thriving 'non-

traditional agricultural export' (NTAX) business as they had the resources to

respond relatively quickly to the new outward-looking development strategy of

the neoliberal trade and macroeconomic policy reforms. In view of the dynamism

of NTAX sector it was thought that a shift in the production pattern of

peasant farmers to these products would spread the benefits of NTAX growth

more widely and ensure their survival. However, experience has been rather

mixed.

To analyze the impact of NTAX growth on smallholders and rural labourers

Carter, Barham and Mesbah (1996: 37-38) argue that this depends on three

factors:

whether small-scale units participate directly in producing the export

crop and enjoy the higher incomes generated from it (which we call the

'small-farm adoption effect'); second, whether the export crop induces a

pattern of structural change that systematically improves or worsens the

access of the rural poor to land (the 'land access effect'); and third,

whether agricultural exports absorb more or less of the labour of

21

landless and part-time farming households (the 'labour-absorption

effect').

They examine the cases of agro-export growth in Paraguay, based on soybeans

and wheat, of Chile, based on fruit, and of Guatemala, based on vegetables.

Their findings reveal that only in the case of Guatemala was there a broadly

based growth as both the land access and net employment effects were positive,

while the opposite happened in Paraguay resulting in exclusionary growth. The

Chilean had elements of both as the net employment effect was positive but the

land access effect was negative (ibid.: 45). Thus in Chile the fruit-export

boom has been partly exclusionary, as many peasant farmers (in this case

largely parceleros) have sold part or all of their land as they were squeezed

by the export boom, and partly inclusionary, as the shift from traditional

crops to fruit-growing increased labour demand.

Even if a larger proportion of peasant farmers were to adopt the new

export crops it is far from certain that this will ensure their survival. Thus

the much fancied NTAX rural development policy of many Latin American

governments cannot be considered as a panacea, especially if no complimentary

measures are taken to create 'level playing fields' (Carter and Barham 1996).

The Chilean experience is in this regard illustrative. First, there has been

a very low adoption rate of NTAXs by small-scale farmers due to financial,

technical, risk and other factors. Second, even those who did switch to NTAXs

they were far more likely to fail as compared to capitalist farmers as they

were less able to withstand competitive pressures due to their disadvantaged

position in marketing, credit, technology, and other markets. According to

Murray (1996) three stages can be distinguished in the transition of peasant

farmers (largely parceleros) to fruit production for global markets. In the

first stage only a small percentage undertake a limited production of fruit

for local and national markets. In a second stage a larger proportion switches

to fruit growing as well as to the expanding fruit export economy. However,

in the third stage, which in Chile begins in the late 1980s and is continuing

today, peasant farmers begin to get squeezed due to the increasing competitive

nature of the export market. As a consequence of rising debts, among other

factors, many are forced to sell all or part of their land thereby

contributing further to the ongoing process of land concentration.

Such an ongoing process of land concentration, which is also happening in

other Latin American areas in which NTAXs are taking hold, is particularly

remarkable in the Chilean case as this process continued since 1990 when the

democratically elected government of the Concertación took office as its aim

is 'growth with equity'. During the years 1964 to 1973 Chile witnessed a

'democratic-State driven' agrarian reform, only to be followed from 1973 to

about 1983 by an 'authoritarian-State driven' agrarian counter-reform, and

22

since 1983 (and earlier) by a 'market-driven' reconcentration of land (Gwynne

and Kay 1997).

Food Import-Substitution (FIS)

An almost forgotten alternative or additional possibility to NTAXs for peasant

farmers is to enhance their comparative advantage in staple food production

(de Janvry 1994). This can be achieved through a programme of 'food import-

substitution' (FIS). Over the last decades an increasing proportion of staple

foods have been imported which had detrimental effect on domestic producers.

For a FIS policy to succeed requires supportive policies by the State such as

specifically targeted protectionist measures to counteract the distortions in

the world food market arising from subsidies to farmers in the developed

countries (the unfair competition argument). Policies aimed directly at

strengthening the position of the peasantry in local and global food markets

would entail the creation of level playing fields. At present these market

fields are greatly biased against peasant farmers and rural labourers. The

import-substitution in staple foods has the advantage of not only saving

valuable foreign exchange but of enhancing food security, employment, and

possibly a more equitable income distribution, especially if it is peasant

farmers who undertake this FIS. The expansion of peasant food output has also

the advantage of being more ecologically-friendly as they use less chemical

inputs as compared to capitalist farmers and also relative to NTAXs.

Instead of viewing NTAXs and food production as being in conflict or as

alternative, they can be seen as complementary. In Schejtman's (1994) view it

is possible to envisage a positive correlation as those peasants who are able

to go into the lucrative agro-export can use their increased incomes,

knowledge and market experience derived from NTAXs to invest in raising

productivity of their traditional food crops.

Similarly, the search for wage incomes by members of peasant farm

households and, in particular, for incomes derived from non-agricultural

activities, either on-farm or off-farm, such as handicraft, food processing,

ecotourism and rural industry can, under certain circumstances, enhance the

productive capacity of the farm's agricultural activities. However, if such

search for additional incomes arise out of distress situation of a peasant

household fighting for its survival it is unlikely that such positive

interaction between farm and non-farm as well as between on-farm and off-farm

activities can be achieved as the peasant household might already have reached

the point of no return thereby remaining in a state of semi-proletarianization

or becoming fully proletarianized or depeasantized. In this case poverty is

the defining feature of the semi-proletarian peasant household and this is

23

captured by the term 'pobretariado', i.e. impoverished proletariat or semi-

proletariat.

Reconversion

The key for the development of peasant farmers and their transition to

'capitalized peasant farms', especially in these days of privatization,

liberalization and globalization is to enhance their market competitiveness. For

this purpose some governments in Latin America are beginning to design policies

for the 'reconversion' (reconversión) of peasant farming which has been referred

to in a variety of ways such as 'productive reconversion’, 'productive

transformation’, 'readaptation to more profitable options’, and 'new productive

and market options’. In a broad sense reconversion measures aim at enabling and

improving peasant agriculture's ability to adapt to its increasing exposure to

global competition and to enter into the more dynamic world market. This is to

be achieved through a series of specific peasant programmes with the purpose of

raising productivity, enhancing efficiency and shifting traditional production

and land use patterns to new and more profitable products thereby increasing the

peasants' competitiveness (Kay 1997).

The False Dilemma State versus Market

To counterpoise the state to the market is to fall into the trap of creating

a false dilemma. The art is to find the right combination between both so as

to ensure the maximum benefit for society. Furthermore, civil society has a

key role to play in structuring such an interrelationship. The lessons to be

learnt from the success of the East Asian development experience is not that

derived from the neoliberal interpretation but from those who recognize the

crucial role that the State played in achieving that success. Thus the

challenge is to find a new role for the State in Latin America in the post-

structural adjustment period by learning the right lessons from its own past

shortcomings and from the successful role it played in other contexts. The

role for a modern State in today's globalized markets is to be less of a

producer, more of a facilitator and, above all, of being a regulator. Thus

markets need to be governed by 'good governance', especially if goals of

sustainability and equity are to be achieved.

Non-Governmental Organizations (NGOs)

This State which governs markets has to develop a new relationship with civil

society by devolving some of its powers, initiatives, financing, and

24

activities to local governments and civil organizations such as NGOs, producer

and consumer organizations, trade unions, women and ecological associations,

and, last but not least, political parties should play an increasing role in

policy formulation and implementation. NGOs are known to be particularly able

to establish close working relationships with grassroots organizations and

their constituency. Such increased participation of individuals and civil

organizations in economic, social and political affairs is likely to

strengthen the democratic processes. By creating a more participatory

framework it might be possible to establish mechanism for regulating and

governing the market for the benefit of the majority in society.

In some instances governments in Latin America have already began to

subcontract certain activities such as technical assistance for farmers to

NGOs, as well as giving greater powers and resources to local administrative

agencies. It is too early yet to assess the significance and impact of such

initiatives but they certainly deserve encouragement as well as scrutiny to

learn the lessons from these new initiatives. However, NGOs face a dilemma

when they become to depend too closely on government resources and appear to

be implementing government policy, especially if this of a neoliberal kind,

as they might loose the support from the grassroots and thus the legitimacy

which they currently enjoy. But if NGOs are in turn able to influence

government policy by turning it more sensitive and friendly towards peasant,

gender, indigenous and ecological issues then this closer relationship is only

to be welcomed. Generally NGOs have too limited resources which constrains the

coverage of their activities to a limited number of beneficiaries. In those

countries where the State has been drastically downsized NGOs have often been

used as a palliative to overcome the abdication of social responsibility by

the State. For example, it is impossible and irresponsible to expect NGOs to

solve the poverty problem. Thus the closer links between State and NGOs can

be a mixed blessing.

25

Differentiated Government Policies

State interventions and regulations have to be geared toward creating a level

playing field in the various markets and ensuring that access to its services

and resources are not limited to the powerful but, on the contrary, are

targeted toward overcoming structural heterogeneity, inequalities and the

disadvantages of the weak and poor in society. This demands the design of

differentiated agricultural policies. Instead of the landlord bias of past

agricultural policies it is the parcelero peasant enterprise arising from the

land reform, the minifundistas and the rural wage workers who, especially

after the ravages of structural adjustment, require the specific support of

the State and NGOs.

Level Playing Fields: Assets and Power

The increasing competitive gap between peasant and capitalist farming due to

agriculture's unequal modernization limits the survival of the peasant

producers and perpetuates rural poverty. A few enlightened neo-liberals accept

that rural markets in Latin America are distorted and biased against the

peasantry and hindering the pursuit of efficiency and maximization of welfare

(Binswanger, Feder and Deininger 1995). The slogan of 'getting prices right'

is certainly not a panacea for rural development and its proper achievement

entails structural reforms of which the less enlightened neoliberal proponents

seem to be completely unaware. The creation of level playing fields requires

a redistribution of assets as well as the empowerment of peasants and rural

workers. Thus the need for land reform remains throughout Latin America even

though many were implemented but they were limited and flawed in their

execution. While land titling programmes for peasants, which became

fashionable in the last decade or so, may give greater security of tenure and

thereby encourage investment they are restricted in scope. Although land

reforms are no longer on the political agenda, except in Brazil, the problem

of land concentration remains. While the era of large scale land reforms may

have come to a close in many Latin American countries a creative land policy

will also make use of progressive land taxes, land settlements, land titling,

and provide special arrangements for smallholders and landless groups to get

access to land via the land market. Land policy reforms are far from dead as

a broadly-based and sustainable development strategy requires a fairer

distribution of land assets.

However, access to finance and knowledge are increasingly important assets

in today's globalized world. This calls for government policies which

facilitate peasant access to these other two crucial assets through market

26

reforms, human resource development, and special credit and technical

assistance programmes. Some of these projects can be implemented by NGOs and

the private sector. Governments have to give greater priority to rural

education and undertaking infrastructural works such as irrigation and road

projects which are targeted to smallholder communities.

The above mentioned policy reforms have little chance of being implemented

and of succeeding unless peasants and rural workers develop their own

organizations such as producer associations, cooperatives and trade unions. It

is only through the creation of a countervailing power by peasants and rural

workers and by exercising constant pressure that they will be able to shape the

future to their advantage rather than having to continually accept the

disadvantages of the past and present. While undoubtedly the State, political

parties and NGOs can provide the necessary supportive role the development of

such organizations depends on the determination of peasants and workers

themselves. Although it is difficult to develop such organizations it is also

true that the removal of structural constraints of the kind mentioned earlier is

surely going to facilitate the empowerment of peasants and rural workers.

Whether or not these proposals will be adopted is an open question. But

there are grounds for some optimism as new opportunities have emerged for

going beyond the debt crisis. Real exchange rate devaluations should favour

peasant farmers, as they make more intensive use of labour and less use of

chemical inputs, compared to capitalist farmers whose costs of capital and

tradable inputs would increased. Meanwhile trade liberalization has removed

some biases against agriculture, although it is important to remember that

'urban bias' was not the main cause of all rural ills. These changes provide

incentives for import-substitution in staple foods which should benefit

peasant farming. New technological advances in agro-ecology and social

forestry, although still limited in their application, tend to favour peasant

farmers. Last, but not least, the explosive expansion of NGOs have certainly

made governments more sensitive to issues of poverty, equity, gender and

ecology. The extent to which these new opportunities are resulting in

meaningful changes in favour of the peasantry remains to be seen.

The neoliberal project has certainly not gone unchallenged by peasants.

The peasant rebellion in Chiapas, the most southern and indigenous region of

Mexico, at the beginning of 1994, was fuelled by the exclusionary impact of

Mexico's agricultural modernization on the peasantry (Harvey 1994) and by

fears that Mexico's integration into NAFTA will marginalize them further

(Collier 1994). Undoubtedly Mexico's peasant economy cannot compete with the

large-scale mechanized maize and cereal farmers from North America unless

special protective and developmental measures are adopted in their favour. The

uprising in Chiapas has given an important warning to governments throughout

Latin America that they ignore at their peril.

27

Conclusions

This essay shows how Latin America's rural economy and society have been

transformed in recent decades as a consequence of the increasing capitalist

development of agriculture and its further integration into the world economy.

Latin America's agriculture is now an integral part of the new world food

regime. Agro-industrial modernization and globalization have profoundly

changed the technical and social relations of production in the countryside.

Furthermore, the recent shift towards a new liberal era, reminiscent of the

pre-1930 liberal period of outward-oriented growth, is intensifying these

changes and bringing about new structural transformation.

This form of modernization has benefited only a minority of the rural

population and excluded the vast majority of the peasantry. The beneficiaries

are a heterogenous group, including agro-industrialists, capitalist farmers,

and some capitalized peasant households. The losers are the semi- and fully

proletarianized peasantry, the majority of rural labourers whose employment

conditions have become temporary, precarious and 'flexible'. Some landlords,

however, have also lost out especially in countries where more radical

agrarian reforms were implemented or where they have succumbed to competition

following the liberalization of the country's trade.

Agriculture and the rural sector are increasingly being subordinated to

industry and the urban sector in terms of production processes (with the

growth of agro-industries) and in terms of the demand for products. The

dynamism of agriculture is increasingly dependent on the stimulus it is able

to receive from the urban-industrial economy. This is accompanied by the

rising importance of rural non-agricultural employment as well as off-farm

activities for agricultural producers.

With the increasing integration of Latin America's rural sector into the

urban sector, the boundaries between rural and urban have become ambiguous.

The massive rural out-migration has partly 'ruralized' the urban areas and the

countryside is becoming increasingly urbanized. Urban and rural labour markets

have become more closely interlinked. The land market has become more open and

competitive enabling urban investors and international capital to gain greater

access to agricultural land. Competition among agricultural producers has

intensified due to the more fluid situation in the land, capital and labour

markets. The survival of large landlords, let alone peasant farmers, is no

longer guaranteed unless they keep up with technological developments,

innovate, and adjust their output pattern and production structure according

to the changing market conditions.

While the rural economy and society are less important today than in the

past, it still retains critical significance in most Latin American countries.

28

The 'lost decade' of the 1980s, when structural adjustment programmes

proliferated throughout Latin America, reveals the strength of the rural

economy in confronting the debt crisis and responding to changed circumstances

such as a new impetus to export agriculture. To ignore the agrarian question

of unequal access to land, rural poverty, and exclusionary modernization, is

ill-advised. In Brazil and Guatemala, the land problem has not yet been

properly addressed whilst in many others it remains unresolved. Rural poverty

remains widespread and discrimination against indigenous communities is still

pervasive. Last, but not least, the continuing promotion of agro-exports

further depletes natural resources and societal forces are still not strong

enough to prevent the persistent ecological deterioration. Nevertheless the

environmental movement has emerged as a major social force in recent years

forcing governments to introduce environmental legislation but the practical

outcome is still unclear.

Although the shift from a State-centred inward-directed development

process to a neoliberal market- and export-oriented model has weakened the

power of traditional peasant organizations through the fractioning of rural

labour, many social conflicts will continue to originate and erupt in the

countryside. New grassroots organizations have emerged in the countryside and

it will be politically difficult to continue to impose the neoliberal model

upon the peasantry regardless of its consequences, especially in those

countries where a transition to civilian government has occurred. It is

possible that rural conflicts might even become more violent than in the past

due to the fact that the State has been weakened in its mediating and

incorporating capacity, and because the political parties, NGOs, church and

other intermediary organizations are unable to deal with the effects of the

current unequal and excluding pattern of rural modernization. The neoliberal

model has had in particular an pernicious impact on the swelling ranks of the

semi-proletarian peasantry and the landless workers, who might become a major

force in future social struggles in the countryside.

Overcoming the exclusionary and unequal rural development pattern of the

current neoliberal era requires a radical shift to a post-liberal development

strategy. This post-liberal era has to be shaped by the dynamic interaction

of civil society and an activist State in order to harness market forces for

a democratic, inclusionary and egalitarian development process.

29

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